South Korea's 24-hour forex market shows mixed results one month after its July 6 launch, with overall spot FX trading volumes rising but overnight and holiday trading remaining weak, according to an August 6 assessment. The continuous trading system, which operates from Monday 6 AM to Saturday 6 AM, aimed to improve accessibility for foreign investors and absorb offshore non-deliverable forward trading into the domestic market. Market participants note that while infrastructure has been established to enable won trading around the clock, actual demand during newly opened hours remains insufficient, with bid-ask spreads widening significantly during overnight periods and some hours seeing no transactions at all.
Spot FX Trading Volume Increases 11% in First Month
Daily average spot FX trading volume reached $19.23 billion from July 6 to August 5, excluding Constitution Day, according to Yonhap Infomax daily trading data combining Seoul Money Brokerage and Korea Financial Telecommunications and Clearings Institute figures. This represents an 11.0% increase compared to the January to July 3 average of $17.33 billion and a 33.1% expansion versus the 2025 average of $14.45 billion. Market observers note the actual growth rate may be higher considering the late July to early August period coincided with summer vacation season. The volume increase reflects both extended trading hours and growing foreign investor interest in won-denominated assets.
Overnight Trading Hours Record Minimal Activity and Wide Spreads
Trading volume during the newly opened 2 AM to 9 AM time slot frequently remained at only tens of millions of dollars, with some one-to-two hour periods recording zero transactions. Bid-ask spreads, which maintain tight ranges of 0.10-0.30 won during the 9 AM to 3:30 PM session, were observed jumping by several won during overnight hours. On July 17, Constitution Day, trading volume totaled only $119 million, less than 1% of typical weekday levels. "The infrastructure has been formed, but demand to use that infrastructure is still insufficient," said one forex market participant, adding that thin order books create problems with sharp exchange rate movements during unexpected events. Another participant noted that for offshore traders, the dollar-won pair remains just one among many emerging market currencies, with remaining barriers in trading infrastructure and accessibility.
Government Plans Incentives to Convert NDF to Deliverable Forwards
Foreign exchange authorities are actively communicating with market participants and considering measures to boost overnight trading activity. "Recently, large volumes from major corporations were traded overnight, and while there is volatility, trading volume linked to RFI (Resident Foreign Investor) has been substantial," said a foreign exchange authority official, adding that the government plans to provide incentives for converting NDFs to DFs (deliverable forwards) over the medium to long term. Market participants generally share consensus on the direction of the government's won internationalization efforts, given perceptions that forex market growth has not kept pace with the rapid expansion of South Korea's capital markets. One market participant emphasized that liquidity expansion can follow once the offshore won settlement system and foreign exchange transaction regulation revisions are sequentially implemented. President Lee Jae-myung mentioned on July 15 during economic ministry work reports that "there must be adequate compensation or measures" regarding the 24-hour forex market operation, addressing ongoing concerns about overnight shift burdens on participating institutions.
FAQ
What trading volume increase did South Korea's 24-hour forex market achieve in its first month?
Daily average spot FX trading volume from July 6 to August 5 reached $19.23 billion, an 11.0% increase compared to the January to July 3 average of $17.33 billion and a 33.1% expansion versus the 2025 average of $14.45 billion, according to Yonhap Infomax data.
Why did overnight trading hours show minimal activity despite the 24-hour market launch?
Trading volume during the 2 AM to 9 AM time slot frequently remained at only tens of millions of dollars, with bid-ask spreads widening significantly and some hours recording zero transactions, as market participants note that infrastructure exists but actual demand to use it remains insufficient, with offshore traders still viewing dollar-won as one among many emerging market currency pairs.
